ECB maintains a steady hand as it continues to see itself in a good place

Highlights

• At today’s meeting the ECB’s Governing Council (GC) unanimously and unsurprisingly decided to keep its key rate unchanged at 2.0% as the inflation outlook remained broadly unchanged and confidence into the recovery increased.
• While acknowledging that some growth risks mitigated (EU/US trade deal, Middle East ceasefire, US/China trade deal) the GC again restrained from mentioning a balance of risks. Also, it continues to see higher than usual inflation uncertainty due to the global trade environment and geopolitical tensions. 
• During the press conference President Lagarde carefully avoided to signal any policy bias but reiterated that monetary policy was “in a good place”. The GC is in a wait-and-see modus. All eyes are now moving to the December meeting when updated macro projection will be extended to 2028.
• We feel confirmed in our view that unless some downside risks materialize the ECB has terminated its cutting cycle and stays on hold at 2.0% for the time being.

Download the document: